Mundell - UK Government wants new Scottish tax powers in 2017

Mundell - UK Government wants new Scottish tax powers in 2017

THE UK Government will seek to put Nicola Sturgeon and John Swinney on the spot over tax by announcing it wants Holyrood to begin using its new fiscal powers at the earliest opportunity from April 2017.

During his speech at the Conservative Party conference in Manchester tomorrow, David Mundell will make the “unconditional and unambiguous offer” aimed, politically, at putting the issue of tax and spending at the heart of the 2016 Scottish parliamentary campaign.

The Scottish Secretary noted how the Tories had said they would not put up taxes, Labour had said they would while the SNP had said “virtually nothing” about how it would use the new tax powers.

“It’s now time that they do,” he declared. “They could come forward and say they don’t want to operate these tax powers from 2017 but, given the arguments constantly made and all that debate about full fiscal autonomy, it would be very surprising to me that they didn’t want to use them from the earliest opportunity.”

The Scotland Bill currently going through Westminster is meant to devolve powers, recommended by the Smith Commission, to enable the Scottish Parliament to set the rates and bands of income tax for Scottish taxpayers.

Mr Mundell said the Conservative Government was now keen to transfer the powers in 2017, which was “significantly earlier than anticipated” and that it would “not stand in the way of that happening”.

He explained: “Because we know that the new tax powers are at the heart of the devolution package in the Scotland Bill, we want them to come on stream as quickly as possible. I would like that to be in 2017.”

He explained that the final date for the transfer would be agreed by both London and Edinburgh as part of the so-called “fiscal framework” talks, which are on-going. These cover how the £30 billion annual block grant will be adjusted to take into account Holyrood’s new tax-raising powers.

But the Secretary of State stressed: “2017 is an achievable and desirable time for these new powers to take effect.”

He added: “It would mean that the Scottish Government elected next year would have to include plans for these new powers in its first Budget. So when people go to the polls next year, the parties will need to present their plans for income tax and they’ll need to be honest about what they will mean for Scottish taxpayers.”

In response, a spokesman for the Scottish Finance Secretary said: “The Tories just need to get on with the job of delivering more powers for Scotland and a deal which meets the spirit and letter of the Smith Commission recommendations.

“What is currently proposed fails that test as it limits Scottish Ministers’ ability to use the new powers and retains vetoes for UK Ministers.”

He added: “We still need to reach agreement on a fiscal framework that gives the Scottish Government flexibility to use the new powers effectively, to boost the economy and create jobs and we have made it crystal clear that we will not support any proposed deal which risks leaving Scotland worse off.”

The enhanced-revenue powers are set to reduce the £30bn annual block grant by £11bn while the assignment of VAT will reduce it by a further £4bn but there will be a £2.5bn addition because of the Scottish Government taking on extra spending responsibilities, particularly around welfare. So the block grant will be reduced to around £18bn once the new powers kick in.

“Responsibility comes with these powers,” insisted Mr Mundell. “The Scottish Government will have to think carefully about how it deploys them.

“In terms of income tax take, I would have thought they would want to make Scotland an attractive place for people to come, live and work, and therefore ensure the tax take did not reduce. If you compare it to the SNP’s proposal for full fiscal autonomy, that has a £10bn black hole in it,” he added.

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